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Just when you think sorry seems to be the hardest word, Ben Bernanke comes along and proves, as parents of mewling children already know, that the toughest thing to say can be: No.

For weeks, the Federal Reserve chairman has prepared us for a day when the economy might improve enough to let the central bank scale back or "taper" its $85 billion-a-month bond-buying binge. But just as the markets' "taper tantrum" was subsiding, with investors starting to transfer their trust from the central-bank crutch to the economy, Bernanke last week promised that monetary policy will stay highly accommodative for the foreseeable future.

A little back-pedaling can go far: The already rebounding Standard & Poor's 500 jumped to a new record on the week, and Treasuries recovered enough to push the 10-year yield back below 2.6%. But make no mistake: The policy hasn't changed, even if the posture was slightly softened, perhaps to ease the pressure on the bond market.

The whole episode only highlights the impossible mission ahead. The Fed, by definition, has to be a party pooper—it needs to take away the punch bowl before markets get too intoxicated on easy money. Yet, how do you prepare the biggest bond mob in history for last call without setting off a rush for the exits?

Despite the momentary reprieve, bond strategists are revising up their year-end targets for the 10-year yield toward 3%. The average rate for 30-year U.S. mortgages has jumped in two months to 4.51% from 3.35%, and refinancings have shriveled. Banks and housing, which led us into the last recession, have recently outperformed. How would rising rates affect that recovery?

Home-builder stocks quadrupled in 20 months, but have corrected more than 20% since May to slip into a new bear market. At the current pace of sales, the tight housing inventory will be exhausted in just four months. Yet with enterprise values pushing 25 times cash flows, home-builder stocks are counting firmly on a housing recovery. Reality TV is brimming with shows that feature larger-than-life homes and louder-than-life realtors.

What should an investor in home-building shares do now? Goldman Sachs analyst Eli Hackel suggests focusing on geographies with the best growth potential. Among his picks is
Ryland Group
(ticker: RYL), which has recently acquired smaller builders in robust markets such as Phoenix and North Carolina's Charlotte and Raleigh. Building permits in Ryland's top markets are up 44% year-to-date, versus the national average of 26%. And three-quarters of Ryland's buyers are trading up; they typically have better buying power and easier access to mortgages than first-time buyers.

Rising rates also should help financial stocks, notes Hernando Cortina, Morgan Stanley Wealth Management's senior equity strategist. While the S&P 500 is pushing new highs, the laggard financial sector—with 60% of its market cap in banks, 27% in insurance, and 13% in real estate—is still 50% below its 2007 peak. Handcuffed by tighter regulation, financials' return-on-equity has shriveled to 8%, versus 15% pre-crisis, and the stocks trade at 1.2 times book value, below multiples of 1.8 in 2007 and three times book in 2000.

Still, "banks essentially borrow short by taking in deposits on which they pay short-term interest rates, and lend long by extending consumer or corporate loans," Cortina writes. So the widening spread between 10-year and two-year rates can pad profits. A steepening yield curve also might make banks more willing to lend, which improves the supply of credit to offset the rising cost of credit.

Insurers, reliant on underwriting and returns on cash held before claims are paid, also have suffered from low interest rates. They now could see better investment income as rates rise. For real-estate investment trusts, however, higher mortgage costs could crimp purchases, and rising rates could make REITs' dividend yields look less stellar in comparison. Cortina suggests focusing on REITs with shorter lease terms, such as apartments, that can be repriced if demand improves.

A RISE IN BORROWING COSTS from historic lows need not derail stocks, but until corporate revenues start increasing again, fluctuating rates bear close watching. "The credit market has provided the funding for all the shareholder goodies that have been holding stocks aloft," says Stephanie Pomboy of MacroMavens.

Corporations are rich with cash, but it is mostly in the hands of the biggest companies. As rates jumped recently, the pace of monthly credit issuance shriveled to $58 billion from $260 billion. Here's how much companies have relied on financial engineering and buybacks to placate shareholders: Per-share profits are 10.6% higher than the precrisis peak, but net income is up just 3.3%.

Between January and the start of the tapering talk in late May, the stock market added $2.8 trillion in market value. But the size of the U.S. economy expanded just $500 billion, Pomboy notes. Credit issuance during this stretch totaled—guess what?—almost exactly $2.3 trillion. "If growth—actual and borrowed—dictate where stocks are headed, then the quartering of issuance in the last six weeks portends ugly stuff ahead," Pomboy says.

In other words, the stock market really needs the bond market to behave.